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The analytics of the New Keynesian 3-equation Model

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Listed author(s):
  • Jean-Christophe Poutineau

    ()

    (CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique)

  • Karolina Sobczak

    (PUEB - Poznań University of Economics and Business, CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique)

  • Gauthier Vermandel

    ()

    (CREM - Centre de Recherche en Economie et Management - UR1 - Université de Rennes 1 - Université de Caen Basse-Normandie - CNRS - Centre National de la Recherche Scientifique)

Abstract

Tis paper aims at providing a self contained presentation of the ideas and solution procedure of New Keynesian Macroeconomics models. Using the benchmark “3 equation model”, we introduce the reader to an intuitive, static version of the model before incorporating more technical aspects associated with the dynamic nature of the model. We then discuss the relative contribution of supply, demand and policy shocks to the fluctuations of activity, inflation and interest rate, depending on the key under-lying parameters of the economy.

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Paper provided by HAL in its series Post-Print with number halshs-01184591.

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Length:
Date of creation: 2015
Publication status: Published in Economics and business review, 2015, 1(15) (2), pp.110-129
Handle: RePEc:hal:journl:halshs-01184591
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01184591
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

Keywords: dynamic IS curve; impulse response analysis; New Keynesian Macro-economics; New Keynesian Phillips Curve; output gap; Taylor rule;

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  1. John B. Taylor, 1999. "Introduction to "Monetary Policy Rules"," NBER Chapters,in: Monetary Policy Rules, pages 1-14 National Bureau of Economic Research, Inc.
  2. Marvin Goodfriend & Robert King, 1997. "The New Neoclassical Synthesis and the Role of Monetary Policy," NBER Chapters,in: NBER Macroeconomics Annual 1997, Volume 12, pages 231-296 National Bureau of Economic Research, Inc.
  3. John B. Taylor, 1999. "A Historical Analysis of Monetary Policy Rules," NBER Chapters,in: Monetary Policy Rules, pages 319-348 National Bureau of Economic Research, Inc.
  4. Blanchard, Olivier Jean & Kahn, Charles M, 1980. "The Solution of Linear Difference Models under Rational Expectations," Econometrica, Econometric Society, vol. 48(5), pages 1305-1311, July.
  5. Klein, Paul, 2000. "Using the generalized Schur form to solve a multivariate linear rational expectations model," Journal of Economic Dynamics and Control, Elsevier, vol. 24(10), pages 1405-1423, September.
  6. Peter Bofinger & Eric Mayer & Timo Wollmershäuser, 2006. "The BMW Model: A New Framework for Teaching Monetary Economics," The Journal of Economic Education, Taylor & Francis Journals, vol. 37(1), pages 98-117, January.
  7. Poutineau, Jean-Christophe & Vermandel, Gauthier, 2015. "Cross-border banking flows spillovers in the Eurozone: Evidence from an estimated DSGE model," Journal of Economic Dynamics and Control, Elsevier, vol. 51(C), pages 378-403.
  8. John B. Taylor, 1999. "Monetary Policy Rules," NBER Books, National Bureau of Economic Research, Inc, number tayl99-1, October.
  9. Carlin, Wendy & Soskice, David, 2014. "Macroeconomics: Institutions, Instability, and the Financial System," OUP Catalogue, Oxford University Press, number 9780199655793.
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Cited by:

  1. Giannoulakis, Stylianos, 2017. "Fiscal and Monetary Policy in a New Keynesian Model with Tobin’s Q Investment Theory Features," MPRA Paper 80892, University Library of Munich, Germany.
  2. EL FAIZ, Zakaria & ZIANI, Manal, 2016. "Influence de la politique monétaire sur le taux long Quelques évidences empiriques, cas du Maroc
    [The impact of monetary on long rates : Some empirical evidence from Morocco]    ," MPRA Paper 72817, University Library of Munich, Germany.
  3. Fritz Breuss, 2016. "Would DSGE Models have Predicted the Great Recession in Austria?," WIFO Working Papers 530, WIFO.

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